What is the significance of “likelihood of confusion” in trademark law?

To be valid, a trademark must not only identify the source of a product or service, but it must distinguish it from those of competitors. Trademark rights cannot be enforced if the trademark is confusingly similar to another trademark that is being used to market the same, similar or related kinds of products or services. For example, if you establish an independent tax preparation service called H&R BLOCK, you won’t have an enforceable right to the exclusive use of that name as a brand identifier for tax preparation services, because it would very likely confuse consumers about the source of your tax preparation services. They would reasonably confuse your company’s services with those provided by the pre-existing company called H&R Block.

If a brand identifier fails to distinguish the product or service from a product or service provided by a pre-existing trademark owner, it does not, and cannot, function as a trademark.